We often get asked if gambling losses are tax deductible. The answer is yes, but only to the extent they offset winnings. Read below for details.........

Limitations:You can never deduct any amount of gambling losses that exceed the winnings you report as income on your tax return. For example, if you have $2,000 in winnings and $5,000 in losses, your deduction is limited to $2,000. The remaining $3,000 in losses is your penalty for gambling!

Ultimately, the IRS allows you to deduct losses to help you avoid paying taxes on any gambling winnings. But you cannot receive any additional deduction for losses.

Documentation:In order to document losses, the IRS requires you to keep a log of your gambling winnings and losses. This log must include the date, type of gambling, name & address of gambling location, people you gambled with (if applicable), and the amount of gain or loss from gambling. Documentation can include wagering tickets, canceled checks, Form W2-G, credit card receipts, etc.

Words of Wisdom:Just remember the words Chad’s grandpa always told him, “Gambled money has no home!” There is a reason Las Vegas has tall buildings! Here are a couple related articles we wrote that you may enjoy: